Amazon Tests in-App Purchase Service to Challenge Apple, Google
April 3 (Bloomberg) -- Amazon.com Inc., the world's largest online retailer, is testing a service that lets tablet users make purchases through mobile applications, a sign it may enter a market pioneered by Google Inc. and Apple Inc.
The service being tested allows both subscriptions and purchases of individual items within apps, according to Maria Ly, co-founder of Skimble Inc., a seller of physical fitness programs that has been involved in Amazon's pilot for about a month. Kinley Pearsall, a spokeswoman for Seattle-based Amazon, didn't immediately return a request for comment.
Selling items from within downloadable software can generate revenue for developers as well as companies, such as Google and Apple, that distribute apps through online stores. Amazon could use the transactions to wring more sales from its Kindle Fire tablet and the widening array of applications that can be downloaded to the device. So-called in-app purchases will generate $5.6 billion in revenue in 2015, up from $970 million last year, according to IHS.
"We really wanted to attack the Kindle Fire market, but also have access to the payment methods that support our business," Ly said.
Most of Skimble's sales come from subscriptions and in-app purchases, such as specific workout regimens, she said.
Amazon plans to charge a 30 percent commission to clients for its in-app purchase service, the same rate as it charges developers for app sales, Ly said.
San Francisco-based Skimble charges $24.99 for a three- month membership of its workout program and an average of $9.99 for individual programs. It would offer both packages with the new Amazon app service, Ly said.
"It's still kind of in its early stages," Ly said of the services being tested. "But we're very optimistic about it."
Amazon slipped 2 percent to $198.05 yesterday in New York. It has climbed 14 percent this year.
To contact the reporter on this story: Danielle Kucera in San Francisco at dkucera6@bloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net
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